Making one million dollars can be done.
It doesn’t require luck — unless you win the lottery or inherit some money. Instead, making your first million requires consistency and a desire to take action and follow the paths explained below.
With that said, the sad reality is that a lot of people will never make one million dollars in their lifetime despite the simple ways it takes to achieve it.
One reason for that is a combination of bad habit and procrastination.
Achieving your first million is determined by your habits. Millionaires are those who have good money habits.
A lot of times they aren’t the smartest and don’t earn the most. They develop daily habits; they spend less than they make.
Secondly, procrastination is perhaps your biggest obstacle preventing you from making your first million dollars.
You’ll get to it someday. You have an idea of what to do, but somehow there is some other priority.
So, developing good habits and start taking action now are starting points for your one million dollars.
So, what are the ways you can make one million dollars? Here are 10 of them.
1. Take advantage of your company 401(k) (if they offer it).
You can become a millionaire quickly if you participate in your employer’s 401(k).
The 401k contribution limits for 2021 is as follows: If you’re at least younger than 50 years old, you can contribute up to $19,500 in 2021.
The 401k contribution limits for older employees, i.e., 50 years and older, is $19,500 plus an extra $6500.
That extra is called a catch up contribution limit. That brings the total 401k contribution limits to $26,000 (for tax year 2021), for those 50 and older.
If you work for a profit employer, you may have access to a 401k plan. If so, a good advice is to take advantage of it.
The money you contribute to the 401k plan grows tax free until you take it out. That also means interest and/or dividends you receive grows on a tax deferred basis. Also, the money you contribute to your 401k plan is tax deductible.
The higher 2021 401k contribution limits is not only the benefit of participating in your employer’s 401k plan.
Another great benefit is the employer matching. In most cases, your employer offers a match. It can be dollar for dollar or 50 cents for each dollar.
So participating in your 401k plan can by itself or contribute to your first one million dollars.
2. Spend less than you earn.
While this may seem obvious, many people have a hard time to follow it. If you’re spending more money than you make, you will never make your first million dollars.
Start by saving as much as you can. However, you cannot save yourself to wealth. You need to start investing.
Remember this, in order to invest, you must first save. In order to maximize your savings, you must spend less.
3. Choose a better career.
Some careers have more potential to make more money than others. You’re more likely to make more money in your lifetime if you are a doctor than you would if you are a teacher.
So, if you’re in college or intent to go to grad school, choose a career that has a higher-paying job potential. However, your salary alone will not make you wealthy. One reason is “Tax.”
Most people believe that a high salary is the most important way to build wealth. An extra $10,000 or $20,000 is great, but a higher salary may result in you paying more tax.
4. Invest in real estate.
Without a doubt investing in real estate is one of the proven ways to make one million dollars or more. In fact, several billionaires have built their wealth through real estate.
They’ve used real estate investment as their wealth creation because it provides: 1. high capital growth and 2. secure income.
While it can take a long time to build wealth through real estate, there is a strategy to speed up the process. It’s called “leverage,” — something the wealthy are too familiar with.
Leverage is using other people’s money to make money. You can use money you don’t have –other people’s money– to make you a millionaire.
Assuming you like to purchase your first property listed at $350,000. You can put down 5% ($17,500) and borrow the other $332,500.
Over time, you will build equity in the property. You can use the equity and rent from that first investment property to buy a second property.
Rinse and repeat this investment strategy, and you will find yourself with one million dollars.
Investing in real estate is a well proven way to make one-million dollars and more.
5. Invest in low cost index funds, ETFs, or individual stocks.
Investing in the stock market has the potential to make you very wealthy. But it’s risky business. You have to know what you’re doing.
If you’re just starting out, it might be a good idea to look into investing in mutual funds or index funds. A mutual fund is an investment vehicle, where investors pool their money together to buy shares.
While most mutual and index funds can be risky (especially those that invest in stocks), their diversification make them a safer investment.
Most of these funds own stocks or bonds from dozens of companies across multiple industries. So, if one stock is not doing well, another stock can balance it out.
They are easy to purchase. You can buy index funds and mutual funds through fund companies like Vanguard and Fidelity.
They also have low-cost, which is usually less than 1% annually. This lower operating expenses help boost your returns.
Investing in the stock market (whether in individual stocks or mutual funds) in general, can be intimidating.
If you are just starting out and don’t feel confident in your investing knowledge, you may value the advice of a financial advisor.
A financial advisor is there to help you with your finances. It’s your financial advisor’s job to protect you from making mistakes.
6. Make more money.
Contrary to what you may believe, a high paying job does not translate to wealth. You may be a lawyer making $250k a year, then you lose your job the next day and lose everything.
However, a regular, monthly paycheck is a very important factor for wealth. While on your journey to wealth, a high income can reduce anxiety, stress and gives you assurance that there is food on the table and your mortgage payments are being made on time.
Moreover, the more money you make, the more money you can save and invest. And investing in equities is one of the best ways to amass wealth.
If you are in you are young or n the midst of a career change, look for a career that you’ll enjoy the most and most certainly a career that pays well
Here’s what you can do to make more money.
- get more education/training
- Change jobs
- Start a side hustle
- Ask for a raise
- Do a part-time job or freelance work
In conclusion, you can make one million dollars by following the advice above. While this may seem simple, many people will never achieve it. Why? Because it requires discipline and delayed gratification–sacrificing today in return for more choices later in life.
Speak with the Right Financial Advisor
If you have questions beyond investing in index funds, mutual funds and CDs, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.